Rate Lock Advisory

Monday, December 15th

Monday’s bond market has opened in positive territory despite no relevant data and little in terms of headlines this morning. Stocks are calm with the Dow up 12 points and the Nasdaq down 29 points. The bond market is currently up 6/32 (4.15%), which should improve this morning’s mortgage rates by approximately .125 - .250 of a discount point if compared to Friday’s early pricing.

6/32

Bonds

30 yr - 4.15%

12

Dow

48,470

29

NASDAQ

23,165

Mortgage Rate Trend

Trailing 90 Days - National Average

  • 30 Year Fixed
  • 15 Year Fixed
  • 5/1 ARM

Indexes Affecting Rate Lock

High

Unknown

None

While there are no economic reports coming today that we need to be concerned about, the rest of the week has several highly influential reports scheduled. In addition to the economic releases, there is also another Treasury auction this week and more speeches or speaking events with current Fed members.

High

Unknown

Employment Situation

Tomorrow is when the big activities begin. There are two major reports scheduled for release that may have a strong impact on mortgage rates. First will be the government’s Employment report that will include November’s data and parts of October that were delayed by the shutdown. Forecasts have the unemployment rate holding at September’s 4.4% and 40,000 new jobs added to the economy. Apparently, we won’t ever get October’s unemployment rate due to the shutdown. There also is an expectation from some analysts that September’s 119,000 payroll number may be revised lower in this week’s report and October is going to show a decline in jobs due to a large number of government worker buyouts that were recorded that month.

High

Unknown

Employment Situation

Another headline number in the Employment report that bonds tend to be very sensitive to is average hourly earnings. Rising wages give consumers more money to spend and employers need to raise costs of their products and services to cover the higher wages. This fuels inflation that makes bonds less appealing to investors, leading to increases in bond yields and mortgage rates. Tomorrow’s report is expected to show a 0.3% rise in earnings. Favorable news for bonds and mortgage rates will be a smaller payroll number for November, an increase in unemployment and a softer rise in earnings. That scenario would indicate weakness in the employment sector, allowing bonds to rise and mortgage rates to move lower.

High

Unknown

Retail Sales

Tomorrow’s other highly important report will be October’s Retail Sales report, also at 8:30 AM ET. This is another shutdown-delayed report that is a bit aged now. November’s update is expected to come sometime next month. Still, it should carry enough weight in the markets to heavily influence rates, especially if the employment data doesn’t show any surprises since consumer spending makes up over two-thirds of the U.S. economy. It is expected to reveal a 0.2% rise in consumer spending. A decline in sales would be very good news for mortgage rates.

---

Unknown

none

Overall, tomorrow is a strong candidate for most important day for rates because of the heavy influence the Employment and Retail Sales reports have on the markets. We are expecting to see plenty of movement in the markets and mortgage rates this week. Therefore, please proceed cautiously if still floating a rate and closing in the near future. Some days may bring multiple changes to pricing.

Float / Lock Recommendation

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

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Manhattan Beach, CA 90266
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